There’s a rumbling throughout the commercial real estate brokerage business. The industry appears to be attracting a higher caliber of sales talent than ever before. The extended real estate boom and the aggressive push that many brokerages have made to revitalize their talent pools have helped make the industry an attractive destination for smart, ambitious graduates.
I’m impressed with the new wave of recruits I’ve met at firms around the nation—brokers with degrees from top universities and, perhaps more importantly, that distinct hunger that marks a salesperson bound for greatness.
There’s a lot to like about the profession, including high earning potential, flexibility, camaraderie and growth opportunities. Commercial real estate firms would be wise to flaunt those attributes to attract young talent. Like many organizations, they may soon face a sizeable skilled labor shortage. The average commercial real estate professional is 60 years old. Retirement isn’t too far off for a sizeable segment of the industry. But finding skilled workers, specifically sales representatives, isn’t easy. This year, 46% of U.S. employers reported difficulty filling jobs, according to an annual survey on talent shortage by ManpowerGroup. Employers are having the most trouble finding skilled tradesmen, technicians and, wait for it, salespeople.
Commercial real estate firms won’t be alone as they compete to attract top talent. Let’s think about what makes the industry attractive to millennial talent.
1. Uncapped earning potential
For a confident sales professional, uncapped earning potential is one of the most alluring factors of the job. Brokers average six-figure salaries, and the best ones can bring in serious cash.
On the flipside, the commission structure is often coupled with a low base salary or, in some cases, none at all. But a disciplined salesperson thrives in this type of entrepreneurial environment where his or her work ethic and talent correlate with compensation.
2. Autonomy and flexibility
Brokers are independent contractors who work under a brokerage license. They are responsible for their own livelihood. They are often given the flexibility to plan their days as they see fit, to prospect in the way that’s best for them and to run deals in their preferred style. Many entrepreneurial-minded young job seekers are attracted to this autonomy. (Although the most effective CRE managers realize they need to maintain check-ins and mentorship programs to support their brokers while still respecting their independence.)
3. Camaraderie and social aspects
Brokerage leaders typically strive to create a sense of community at their firms. New hires can join a team or connect with mentors to further that connection. They can also partake in myriad networking and social opportunities. It is commonplace to take a client out for dinner or a round of golf, and to attend evening events like building open houses and charity events sponsored by clients. These sorts of things make the job interesting, fun and varied for a whole generation of workers who don’t want to remain chained inside a lonely cubicle all day.
Like other professions, CRE gets better the longer you do it. You develop long-term client relationships. You may make more money. You delegate more and partner with young blood to help with grunt work and admin tasks. And you don’t have to fall into the trap of monotony. No year is the same. No day is the same. The industry changes with evolving business trends. Brokers have a chance for a lifetime of continued professional development.
Eighty-seven percent of millennials say development in the workplace is important. In commercial real estate, you can carve out a real niche for yourself and become an expert in a particular vertical or region. You decide what you specialize in, and you can add new areas to your portfolio as you see fit. And with the advent of technology that makes it easier for building owners, tenants and investors to access information on building avails and comps themselves, without the help of a broker, it is increasingly important that brokers prove their value and showcase that expertise.
I found this research on Harvard graduates telling: Almost 19 percent of the 2015 Harvard class of MBA graduates plan to go into finance, but only 4.7 percent of graduates want to be working there 10 years from now. That’s down from 5.7 percent of the 2014 class who planned to work in finance 10 years after graduation.
In commercial real estate, the turnover rate is high in the early years, but many top-performers spend their lives in the industry. The average commercial real estate member has been in the field for 20 years.
What does Wall Street, or any industry or business, need to do to attract top talent long-term? It boils down, in part, to point number five, which is in many ways a culmination of the previous factors.
The skilled labor gap isn’t the only recruitment crisis we’re facing. Employees around the world are not engaged at work, and engagement directly relates to performance and retention. Seventy-one percent of millennials are not engaged or are even actively disengaged, at work. That’s just not an option for brokers. They can’t phone it in. They have to be out there, hunting. They have to be searching for leads, pitching to win new business, managing complex deals, mastering all sides of building sales and leasing and keeping up with changing technology and business trends.
Commercial real estate has a unique opportunity to recruit a wave of highly-qualified brokers. A firm’s ability to do so will determine the top-grossing brokerages of the future. The same can be said of virtually every organization out there.
Millennials want growth opportunities, effective management, technology that empowers them to succeed, and intellectually stimulating work. By understanding this, brokerages can attract and retain the right people—those smart, entrepreneurial young grads who exhibit hustle, drive and purpose.